EDITORS: Please do not use
"Pacific Gas and Electric" or "PG&E" when
referring to PG&E Corporation or its National Energy Group.
The PG&E National Energy Group is not the same company as Pacific
Gas and Electric Company, the utility, and is not regulated by the
California Public Utilities Commission. Customers of Pacific Gas
and Electric Company do not have to buy products or services from
the National Energy Group in order to continue to receive quality
regulated services from Pacific Gas and Electric Company.

PG&E CORPORATION
PURSUES POWER PROJECT IN EASTERN OREGON

Facility Will Be The Company抯
First Merchant Plant in the Pacific Northwest

PORTLAND, OR ?PG&E Corporation
(NYSE-PCG) today announced that its National Energy Group is moving
forward with plans to build a 550-megawatt power plant in Eastern
Oregon. The new facility, projected to begin operation in 2003,
will enable the National Energy Group to capture opportunities in
the increasingly competitive Pacific Northwest electric industry.

"The Umatilla project will
produce clean, cost-competitive electricity to serve the rapidly
expanding market in the Pacific Northwest," said Thomas B. King,
President and COO of the PG&E National Energy Group West Region.
"Through our natural gas transmission system, which crosses Idaho,
Washington and Oregon, and the Hermiston Generating Plant, we already
have a significant presence in the region抯 wholesale energy market.
We plan to grow that presence as part of our overall strategy to
develop generation and gas transmission infrastructure in major
western markets."

The Umatilla plant would
be capable of generating 550 megawatts of electricity, roughly enough
power for half a million homes. In addition to this project, the
PG&E National Energy Group began construction this summer on the
1,000-megawatt La Paloma Generating Plant near Bakersfield, California.
The company has another 1,500 megawatts under development in two
projects located near San Diego, California, and Phoenix, Arizona,
for a total of 3,000 megawatts currently under development in the
West. The company also recently announced plans for a 212-mile natural
gas pipeline from Arizona to Baja California, Mexico. The pipeline
is to be built in partnership with Sempra Energy International and
Proxima Gas S.A. de C.V.

The Umatilla Project will
be fueled by clean-burning natural gas. The plant will consist of
two 275-megawatt units and will be equipped with advanced-technology
pollution control equipment. It will meet every federal, state and
local regulation for air emissions, including Oregon抯 groundbreaking
rules for carbon dioxide offsets.

Lead developer for the Umatilla
project will be Roger Garratt, who successfully developed the La
Paloma Generating Plant.

King said that by locating
the Umatilla project adjacent to the existing 474-megawatt Hermiston
Generating Plant, which is co-owned by the PG&E National Energy
Group and PacifiCorp, the company will be able to capture significant
operating efficiencies. As a result, he said, it will be one of
the most cost-effective plants under development in the West today.

The Umatilla plant will
be connected to the PG&E National Energy Group抯 natural gas pipeline
system, Gas Transmission Northwest (GTN), providing incremental
demand of 84,000 decatherms per day on that system.

Company officials said the
Umatilla project will be the PG&E National Energy Group抯 first
merchant power plant in the Pacific Northwest. Generation from a
merchant plant is sold into the wholesale power market on a competitive
basis to a variety of potential purchasers, including traditional
utilities, municipal and public power agencies, electric cooperatives,
power traders and large industrial users. Merchant power plants
have become more common over the past few years, as deregulation
has increased competition among generation suppliers.

"Development of a merchant
power plant adjacent to our pipeline system in Oregon is an excellent
example of our strategy to optimize our strong asset position in
the Pacific Northwest," King said. "With the passage of deregulation
legislation in Oregon last year, we believe the market there is
ready for development of competitive electric generation."

The PG&E National Energy
Group expects to apply to the Oregon Energy Facility Siting Council
this fall for a license to build the plant. The company expects
to begin construction by late 2001 and have the plant ready for
commercial operation in 2003.

PG&E Corporation, with revenues
of more than $20 billion and operations in 21 states, markets energy
services and products throughout North America. The Corporation
has ownership and management interest in more than 30 power plants
across the United States, including the Hermiston Power Plant in
Oregon. PG&E Corporation抯 businesses also include Pacific Gas and
Electric Company, the Northern and Central California utility that
deliver natural gas and electricity to one in every 20 Americans.